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Hyperliquid JELLY Manipulation Breakdown: How a 500% Pump Nearly Cost $12M
In a shocking turn of events, decentralized exchange (DEX) Hyperliquid has been embroiled in a massive liquidity crisis after the price of meme coin JELLY surged by an astonishing 500%, putting at risk $12 million in losses. The situation unfolded when a trader deposited a staggering $7.167 million across three separate accounts within a mere five minutes, before proceeding to make leveraged trades on the illiquid JELLY token.
As a result of this unprecedented maneuvering, Hyperliquid’s liquidity vault faced the very real prospect of being wiped out entirely if the token’s market capitalization continued to rise. Fortunately, swift action by the exchange’s validators intervened to reset JELLY’s price to its original short position level of $0.0095. This drastic measure allowed Hyperliquid to liquidate a massive 392 million JELLY tokens, transforming what could have been a catastrophic loss into a more manageable profit of $703,000.
However, in an effort to prevent further manipulation, the exchange promptly closed all open JELLY positions and removed the token from its platform. Additionally, Hyperliquid has promised to reimburse affected users, with compensation set to be automatically distributed, except for flagged addresses suspected of being involved in the scheme.
The handling of this situation has drawn mixed reactions, with some praising the DEX’s prompt response while others, like Bitget CEO Gracy Chen, have criticized its actions as more reminiscent of those taken by centralized exchanges. This marks Hyperliquid’s second major liquidity scare in just two weeks, following an earlier incident in which a whale’s $200 million Ethereum long liquidation led to a $4 million loss for the exchange’s liquidity vault.
The repeated turmoil has understandably shaken confidence, resulting in a significant decline of over 12% in Hyperliquid’s native token, HYPE, on a single day and a staggering drop of more than 30% for the month.
Source: https://coinpedia.org/news/hyperliquid-jelly-manipulation-breakdown-how-a-500-pump-nearly-cost-12m/
